The Delaware Supreme Court reinstated Elon Musk’s 2018 Tesla CEO Performance Award on December 19, 2025, reversing a lower court’s order to rescind it. The package—often described as worth $56 billion—was a performance-based stock-option award, not a fixed cash payment, and its potential value changed with Tesla’s share price. Tesla shareholders voted to ratify it again in 2024 after the lower court’s ruling; public campaigning by Musk supporters surrounded that vote, but the legal outcome turned on the courts’ rulings about the award and its remedy.
What the $56 billion figure means
Tesla’s board approved the 2018 CEO Performance Award, a stock-option plan for Musk that shareholders also approved that year. The headline figure is an approximate potential value associated with the options and Tesla’s stock price—not a cheque, a fixed salary, or cash already paid. The value could rise or fall as the share price changed.
The distinction matters: the dispute concerned whether the award should stand, not whether Tesla had already paid Musk $56 billion in cash. Tesla’s May 2025 shareholder letter called it the “2018 CEO Performance Award”; that company description reflected the litigation posture at the time, before the Delaware Supreme Court reinstated the plan.
How the dispute unfolded
| Date | What happened |
|---|---|
| 2018 | Tesla’s board approved the CEO Performance Award, and shareholders approved it. |
| January 30, 2024 | After stockholder Richard Tornetta challenged the award in derivative litigation, Delaware’s Court of Chancery issued a post-trial opinion ordering it rescinded. |
| June 2024 | Tesla held a second shareholder vote. Tesla’s 2024 Form 10-K later reported that 72% of disinterested shares voted to ratify the award. |
| December 2, 2024 | The Court of Chancery denied the defendants’ motion to revise its ruling and awarded Tornetta’s counsel $345 million in fees, according to Tesla’s 2024 Form 10-K and contemporary Associated Press coverage. |
| December 19, 2025 | The Delaware Supreme Court reversed the rescission remedy, reinstated the 2018 plan and awarded nominal damages. |
The Delaware Supreme Court’s December 2025 decision is the controlling appellate outcome for the plan’s status. The separate Delaware Supreme Court opinion issued January 30, 2026, concerned Tesla non-employee directors’ compensation litigation, not Musk’s CEO award.
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Why the second shareholder vote did not end the case
Tornetta’s case challenged the board’s approval process and disclosures, arguing the award was unfair. The Court of Chancery ruled for Tornetta after trial and ordered rescission. Tesla then sought a fresh shareholder ratification, but the same court declined to revise its judgment.
In its December 2024 ruling, Chancellor Kathaleen St. Jude McCormick wrote, as quoted by the Associated Press, “Even if a stockholder vote could have a ratifying effect, it could not do so here due to multiple, material misstatements in the proxy statement.” In other words, the court’s concern was not simply whether shareholders supported the award; it also considered the approval process and the information presented to them.
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The Delaware Supreme Court later changed the result on appeal by reversing the rescission remedy and reinstating the plan. The sequence is important: the 2024 vote did not itself erase the Chancery judgment, while the later appellate decision did reverse the remedy.
What Musk’s supporters did—and what their campaign did not establish
During Tesla’s 2024 proxy campaign, Musk supporters posted publicly in favor of ratification. Tesla’s 2024 definitive additional proxy materials filed with the SEC included materials tied to content Musk engaged with, as reported by TechCrunch. Tesla’s legal team used those materials in its disclosure effort concerning the vote.
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That public activity explains why the episode was described as a battle involving Tesla and its fans. It does not show that fan posts determined the legal outcome. The vote result, the Chancery court’s analysis of the board process and proxy disclosures, and the Supreme Court’s later appellate ruling are separate parts of the story.
The interim award was a separate arrangement
While the 2018 plan remained in litigation, Tesla disclosed a distinct interim restricted-stock award in a May 2025 SEC filing. The filing described 96 million restricted shares, a $23.34 purchase price per share and a two-year vesting term. The award was conditional on antitrust regulatory approval and Musk continuing to serve in a senior leadership role.
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Tesla said the interim award could not be retained on top of a fully reinstated 2018 award. The May 2025 filing does not establish that the interim award’s conditions have since been met, so it should not be treated as proof that Musk received those shares or as another description of the 2018 options.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What the outcome means
The 2018 plan has been reinstated by Delaware’s highest court, with nominal damages awarded in place of the Chancery court’s rescission remedy. That resolves the central question of whether the plan stands, but it does not turn the approximate $56 billion valuation into a fixed cash payment. The separate interim award had its own conditions, and the materials cited here do not establish whether they were fulfilled.
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